A journey of finding primordial purity of thought,word and action within oneself.

Tuesday, May 29, 2012

The raging bull called unemployement

The troubles just keep mounting
for Spain. After GDP growth shrank in the first quarter of 2012, it formally
pushed Spain into recession for the second time in two years. Another 366,000 lost their jobs, increasing the
tally to 5.6 million, unemployment rate reached close to 25%. Spain along with
rest of Europe and the US are discovering that economy
after all comes first. Though the linkage between economic conditions and
social unrest is complex, even the first world citizens are no less tolerant or
immune to shocks in economy. Some of the protests in Spain unlike Occupy
movements have been more violent in nature. Why is unemployment such a key
determinant of peace and well-being?

Robert Kennedy, JFK’s brother and
former Attorney General in an often quoted speech said that, “GDP does not
allow for the health of our children, the quality of their education, or the
joy of their play. It does not include the beauty of our poetry or the strength
of our marriages; the intelligence of our public debate or the integrity of our
public officials. It measures neither our wit nor our courage; neither our
wisdom nor our learning; neither our compassion nor our devotion to our
country; it measures everything, in short, except that which makes life worthwhile”

While it is hard to disagree with
the eloquence of such rhetoric, Spain is another pointer as to why GDP growth
is after all the foundational basis upon which we seek things in life which are
worthwhile. Yes, GDP does not measure the joy of our children’s play. But
having almost 1 out every 4 young graduate unemployed reverses the private
returns to pursuing education, making neither the pursuit nor use of such an
education of whatever quality worthwhile. Yes, GDP growth does not capture the
virtues of our poetry, marriages, social intelligence and public officials.
Sadly, when you can’t be productively engaged and feed yourselves, let alone
your family, there is no wisdom or courage in pursuing beauty instead of the
beastly. It is hard not to side with
angry protestors in the age of increasing austerity in Spain.

A recent paper by Jacopo
Ponticelli and Hans-Joachim Voth of Barcelona’s Universitat Pompeu Fabra presents
data to validate such a theory. They put together chaotic episodes in Europe
between 1919 and 2009 – a mix of protests, strikes, assassinations and
attempted revolution – and in fact find a strong correlation between fiscal
austerity and social unrest. Episodes of social unrest occur twice as often
when spending cuts reach 5% of GDP.

Protests induced by austerity
attract far more participants than demonstrations sparked by other causes.
Think climate change for example. In 2010 the International Labour Organisation
warned that high levels of joblessness and of youth unemployment especially,
were likely to trigger above-normal levels of social unrest. Other research
also points to strong correlation between income inequality and social
instability.

A bit more growth and bit less
austerity is after all not a bad recipe. A study at University of Sussex which examined
inequality and unrest in India found that redistribution can improve social
stability. That may well be the underlying message that Spain’s unemployed
youth are giving the government through their protests.

I would certainly not judge the
compassion nor the devotion of Spain’s youth towards their country which
national income accounts do fail to measure until GDP growth first becomes a
valid and worthwhile measure in Spain. To expect anything less than concerned
protest from their unemployed is akin to expecting the raging bull not to chase
the red flagged matador!

About Me

Indian by nationality, journeyman by choice, and will be something by destiny.I seek the most sought after question in human history - Who am I? And,hopefully in the process demystify some elements of the physical, and the metaphysical world around me.